The ministry said it would look at a range of ways to cover the shortfall. Grants from foreign donors could provide 200 million rials, international loans 200 million, borrowing from the local market 400 million, state reserve funds 700 million, and previous years’ surpluses 1 billion rials.

The state finances of all the Gulf oil exporters have been hit by the halving of crude prices in the past six months, with Brent crude now standing at about $57 a barrel.

But Oman’s oil resources are not as ample as those of its bigger neighbours and it has not built up their huge fiscal reserves, so it is more vulnerable than most.

The government has been spending heavily to build industrial projects and infrastructure to diversify the economy beyond oil, and it ramped up social spending to maintain stability after the 2011 Arab Spring uprisings elsewhere in the region. It appears to have decided it cannot cut either form of spending sharply.

The ministry statement did not specify the oil price assumed in its budget calculations, and a regular annual news conference by Financial Affairs Minister Darwish al-Balushi to discuss the budget was cancelled without explanation on Thursday.

The ministry’s statement did not explain how it could limit this year’s drop in revenues to 1 percent if oil prices stayed around $60; oil accounts for about four-fifths of revenues.

In November an advisory body to the government suggested sweeping spending cuts and tax rises, including a levy on liquefied natural gas exports, a royalty on the revenues of telecommunications operators, and a hike in royalties paid for mineral exploitation.

The ministry did not say which if any of these steps had been adopted. Last month, Omani cement firms said the government would double the natural gas charges they pay. A proposal to tax foreign workers’ remittances was rejected, local media said.

A privatisation programme will be carried out in the next three years, the ministry said without elaborating.

“Due to low oil prices, it was necessary to make some temporary measures to maintain financial stability. These measures will not affect the common people, their living standards or employment,” it said.

Actual government spending in 2014 was about 14.5 billion rials, higher than the original budget plan because of “additional unplanned costs”, the ministry said. Actual revenues in 2014 were 13.9 billion rials, largely because of the conservative oil price of $85 assumed for that year. (Writing by Andrew Torchia)